Office of the Historian

53. Memorandum of Conversation1

Washington, June 12, 1964, 3:40–4:15 p.m.

SUBJECT

  • Secretary McNamara’s Meeting with FRG Chancellor Erhard 12 June 1964

PARTICIPANTS

  • German Side
    • Chancellor Ludwig Erhard
    • Minister for Foreign Affairs Gerhard Schroeder
    • Ambassador Heinrich Knappstein
    • State Secretary Ludger Westrick
    • and others
  • United States Side
    • Secretary of Defense Robert S. McNamara
    • Deputy Secretary of Defense Cyrus R. Vance
    • Assistant Secretary of Defense (ISA) John T. McNaughton
    • Robbins P. Gilman, Department of State
[Page 124]

1. Offset Agreement

Chancellor Erhard opened the discussion by referring to the offset agreements on military sales. He requested that the US not insist upon strict accounting and a balance sheet type of agreement signed by both parties. Such a rigid formula might become public and would cause others, for example the UK, to claim similar treatment. The Federal Government was perfectly willing to assist the US in its dollar balance difficulties. The Chancellor stated two reasons for this. First, the FRG balance of trade this year was favorable so that no difficulty was encountered on that score. Secondly, in light of the booming economic conditions in West Germany there were positive anti-inflation benefits to be gained by placing orders in the US. The Chancellor stressed the offset agreements were in the interest of both countries.

Secretary McNamara agreed that the offset arrangement should not be made public, nor should they become a cause for FRG embarrassment vis-à-vis the UK or other countries. He questioned, however, the remarks of the Chancellor as they affected actual performance. While the US Government was grateful for past purchases of the FRG, he was afraid that the size of the current FRG defense budget would not permit the purchase of a sufficiently large quantity of defense material to meet the need fully. The Chancellor replied that some purchases overlapped from one year to the next. Some years the amount might be more and some years less. It could be managed somehow so that the agreed amount of purchases were made. Secretary McNamara said, “You have said you will do it and that is all we want. We don’t have to have a written agreement.”

2. Viet-Nam

Secretary McNamara expressed his appreciation for the German support for US policy in Viet-Nam. Chancellor Erhard said he had been impressed by the seriousness with which President Johnson had spoken to him on the questions of Southeast Asia and Cuba. Mr. McNamara said that these questions were not only important for the US but also for Germany and Western Europe. The danger lay in the loss of this area to the Communists. The reliability of the United States to carry out its treaty obligations and the danger to adjacent countries in that part of the world was also at stake. Chancellor Erhard agreed that this was a bastion of the free world and that it would not be a good alliance if each partner were only concerned with those matters affecting its immediate geographic area. If freedom were threatened anywhere, the Chancellor said, it must be the concern of all members of the alliance. He was aware that freedom could easily be lost in Indonesia and elsewhere in Southeast Asia.

Secretary McNamara said that he appreciated the medical unit which the Federal Government had said it would provide. The Chancellor noted, however, that this matter was still under consideration. The [Page 125] Secretary emphasized that the next few weeks would be very important in Laos and Viet-Nam. Our planes had orders to fire if fired upon, and since we expected group fire, some exchange was inevitable. The Chancellor asked about the morale in Viet-Nam. The Secretary replied that while the bulk of the populace was still under the control of the Government, they have suffered heavy casualties in the past nine years, they were fatigued and concerned about the future. The Viet Cong had made substantial progress since October. Taking everything into account Vietnamese morale was quite good.

The Secretary said that more substantial action by the United States might be necessary in the months ahead. The Chancellor asked whether Secretary McNamara felt anything could be gained from negotiations. The Secretary said, “No,” and the Chancellor quickly agreed. Secretary McNamara felt all was not black, however, since the Chinese Communists and the Viet Cong had problems of their own.

Secretary McNamara noted that Hanoi has been silent with respect to the recent aircraft incidents, Peiping has not threatened force and delicate pressure should prevent further aggression.

In closing, the Secretary said that while the US would not expect military assistance from the Federal Republic, we would like to feel that we had support of the Germans for our policy in Southeast Asia. To this the Chancellor assented.

  1. Source: Department of State, Conference Files, Lot 66 D 110, CF 2413. Secret. Drafted by Gilman and approved in ISA on June 24. The meeting was held in Secretary McNamara’s office. McGhee discussed the offset negotiations in At the Creation of a New Germany, pp. 143–145.↩